Evolent Health Jumps On Soaring Earnings, Strong Guidance


Health care cost management firm Evolent Health (EVH) beat earnings views and increased its full-year guidance Tuesday. The stock, which had made gains late in the day, spiked during extended trading hours.




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Evolent Health Earnings

Estimates: FactSet analysts predicted EVH earning 5 cents per share, a 350% increase from a 2-cent loss a year ago. Revenue was expected to jump 35%, from $222 million in Q1 2021, to $299 million in Q2 2022.

Results: Revenue increased 44% to 320 million, the best gain in years and the third straight quarter of accelerating growth. EVH reported earnings per share ballooned 600% to 10 cents in the second quarter.

Outlook: Evolent Health expects Q3 revenue between $343 million-$363 million. Adjusted EBITDA is forecasted to be in the range of $24 million-$29 million. The company expects sales for the full year to be $1.32 billion-$1.36 billion, up from its previous forecast of $1.16 billion-$1.21 billion.

“Our financials reflect both an increasing number of successful partnerships with our payer and provider clients as well as deeper and broader relationships across our solutions,” CEO Seth Blackley said in a news statement.

Blackley also confirmed EVH had closed on Monday the acquisition of IPG, a provider of surgical management technology for musculoskeletal conditions, from asset manager TPG (TPG).

EVH stock gained 1.15% to 35.19 at the close of Tuesday’s market trading, rebounding from early lows. Evolent stock finished slightly out of buy range. Shares shot up 5% after the market closed.

Evolent Health stock broke out on July 7 last buy points of 32.64 and 33.24 in heavy volume. But shares plunged about 6% on both July 11 and 12, quickly tumbling more than 8% below both entries and hitting the automatic 7%-8% sell signal. EVH stock has rebounded strongly from the 50-day line. Investors could use 33.24 as a legitimate buy point.

After Amazon (AMZN) announced it was acquiring One Medical (ONEM) on July 21, EVH stock bounded above the 33.24 buy point. The buy zone for EVH extends to 34.90.

Evolent Health’s revenue grew 38% in the first quarter to $297 million. EPS swung to a 12-cent profit from a year-earlier loss of 1 cent, after jumping 167% to 8 cents in Q4 2021.

EVH stock has a best-possible Composite Rating of 99. Meanwhile, it has a 97 Relative Strength Rating, an exception IBD Stock Checkup gauge for share price movement with a 1 to 99 score, with 99 tops. The rating shows how a stock’s performance over the last 52 weeks holds up against all the other stocks in IBD’s database. The EPS rating is 77.

Evolent Health And Medical Stocks

The Arlington, Va.-based EVH helps health care providers and payers control costs and financial risks. Evolent Health works with Medicaid, Medicare and private health plans. The company reports that its programs support more than 3 million patients in the US across all lines of business.

Analysts are projecting booming growth for the provider of health care administrative services and software, as many health care-related companies remain relatively insulated from recessionary risks and market downtrends.

Medical stocks continue to hold up well during the market uptrend. Dow Jones stock UnitedHealth (UNH) along with health insurance giant Humana (HUM) and CVS Health (CVS) are all showing signs of strength in the current market.

Evolent Health holds the No. 1 rank among its peers in the Computer Software-Medical industry group. Privia Health (PRVA) and Simulations Plus (SLP) are also among the group’s highest-rated stocks.

With labor costs soaring and people using health care services more as the Covid pandemic wanes, controlling medical costs is becoming a crucial business. Evolent already has agreements with Blue Cross Blue Shield of North Carolina, Florida-based AvMed and Molina Healthcare (MOH).

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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